Difference between leasehold and freehold

There are two fundamentally different forms of legal home ownership: freehold and leasehold. The difference can be between a home that is worth buying and one that may not be. If you own a leasehold property it is important to be aware of the time left on the lease. Short lease terms, those below 80 years, can affect the value of the property as well as a potential buyer's ability to secure a mortgage.

The 1993 Leasehold Reform Act allows most leaseholders to extend their leases by up to 90 years, to potentially improve the value of the property. There are some conditions:

• You must have owned the property for at least two years
• There must have been at least 21 years on the original lease

Leasehold can be extended at any time, whether or not the property is being sold. If you're a home owner and want to extend the lease but still live in the property, the process is straightforward. You will need to instruct a surveyor to carry out a leasehold valuation. The surveyor will establish the likely cost of extending the lease and then serve notice to the freeholder.